The Japan International Cooperation Agency (Jica) has signed a credit agreement with Maynilad Water Services Inc. for a non-revenue water improvement program in the National Capital Region (NCR).
Jica will provide Maynilad with the debt-financing required to carry out a non-revenue water improvement program (including updating water distribution pipes, installing water meters and procuring a water distribution control system) for which long-term concessional funding is needed.
The Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank will lead an arrangement to provide the funds required for water service expansion projects such as laying new water distribution pipes and expanding existing water treatment plants.
This will be the first co-financed project between Jica and a private financial institution under the follow-up measures of “the Partnership for Quality Infrastructure” announced by the government of Japan in November 2015.
Under a Jica private-public partnership assistance program for feasibility studies, project formation began with cooperation from Jica in the planning and formulation stage through a feasibility study proposed by Marubeni Corporation, which is currently one of the shareholding companies of Maynilad.
In addition to being the first private sector investment finance for the water sector in the Philippines since private sector investment finance was resumed, the project will cover the first local currency-based loan for Jica private sector investment finance.
Part of the financing will be based on the Philippine peso, which is expected to mitigate the exchange rate risk for Maynilad.
Under a concession agreement with the Metropolitan Waterworks and Sewage System, Maynilad provides water, sewerage and sanitation services in the West Zone of Metro Manila. The target region has a total population of 9.85 million people (August 2015), and the demand for water in the said area is projected to increase due to factors that include a rising population and an increase in the per capita water consumption accompanying a rising standard of living.
Jica will continue to proactively implement programs for socioeconomic development in developing countries while strengthening ties with private companies.